Making Tax Digital (MTD) will partially replace Self-Assessment Tax Returns with 4 quarterly returns and an annual return, completely transforming the UK tax system.

This affects most unincorporated businesses, including self-employed individuals and landlords, although partnerships and LLPs will be brought within MTD at a later stage. MTD for Income Tax will first come into effect on 6 April 2026 for self-employed individuals and landlords with certain qualifying income levels. The income threshold will be dropping for subsequent years to bring more taxpayers into this new reporting format from April 2027 and 2028.

Who will MTD for Income Tax affect?
From April 2026, MTD quarterly reporting will be required for self-employed individuals and landlords who have over £50,000 in business turnover, rental income, or a combination of the two. This is based on the income reported on the tax return for the 2024/25 tax year. From 6 April 2027, the threshold drops to £30,000 and drops again from 6 April 2028 to £20,000. Whether you have exceeded the threshold is based on the business income and rental income reported on your tax return. If the income declared on your return exceeds the threshold, then MTD quarterly reporting is required from the following 6 April.

For example, taxpayers with business and rental income over £50,000 on their 2024/25 tax return will need to report under MTD from 6 April 2026. Taxpayers with business and rental income over £30,000 on their 2025/26 tax returns will need to report under MTD from 6 April 2027.

Does this change when I pay my tax?
No. The payment dates for tax will remain the same as they are under Self-Assessment, being 31 January after the end of the tax year, and payments on account being due in July and January, as normal.

Who is exempt from MTD for Income Tax?
HMRC have confirmed a list of current exemptions as 
follows:

• Individuals that are non-UK resident (until April 2027).
• Trustees, including trustees of charities and non-registered pension schemes.
• Taxpayers with a Power of Attorney including personal 
  representatives of estates.
• Non-UK resident foreign entertainers and 
  sportspeople with no other income relevant to MTD.
• Practising member of a religious society whose 
  beliefs are incompatible with using electronic 
  communications/records.
• Taxpayers without a National Insurance number.
• Ministers of religion (until April 2029).
• Lloyd’s underwriters (until April 2029).
• Recipients of the Married Couple’s Allowance or Blind Person’s Allowance (until April 2029).

Some of these exemptions will need to be claimed, and we will provide further details once available.

What will I be required to do under the new MTD rules?
If you are within MTD you will be required to keep digital records of the date, amounts and category of income and expenses for your business/rental.

Taxpayers will also no longer be required to submit an annual Self-Assessment Tax Return and will instead be required to submit four quarterly updates, using MTD compatible software.

At the end of the tax year, you will also be required to submit a final declaration which includes details of all other income and gains, similar to a Tax Return.

The final declaration will be due for submission by 31 January following the end of the tax year, as per the existing Self-Assessment Tax Return filing deadline.

Each quarterly submissions report the cumulative income and expenses for that quarter and the earlier quarters for the tax year. This means that any adjustments to earlier quarters can easily be made in the following quarter.

The quarterly update periods and submission deadlines are shown in the table.

Quarterly update periods and submission deadlines
6 April to 5 July

For example, the submission deadlines for the first year starting April 2026 are as follows:

How we can help 
We appreciate that this is a seismic change to the UK taxation system. Our team is here to help support our clients through these changes.
If you would like any further guidance or have any questions, please contact us.